Most of the work done by the state Department of Commerce could be eliminated or transferred to other agencies, saving money for taxpayers, according to the state Auditor General’s Office.
The report, to be made public Monday, says there is no need for four of the department’s 13 major functions. Another four could be eliminated though they easily could be done by someone else. Auditor General Debbie Davenport said the balance of the agency’s operations do not duplicate what is done elsewhere.
But she said if lawmakers decide to abolish the department entirely, all these programs "could readily be transferred to other agencies."
The report, a copy of which was obtained by Capitol Media Services, drew an angry response from Deputy Commerce Director Joe Yuhas. He accused Davenport and her staff members of starting out their review with the preconceived idea of reducing the size of the agency or eliminating it entirely.
Yuhas and his staffers immediately went on the offensive to save the agency, which employees about 90 people. They contacted business executives to rally support.
The final decision on the future of the agency rests with lawmakers. Unless they vote next year to continue the department, it will be abolished.
The agency, established in 1985, is charged with promoting economic growth. That includes attracting new businesses, helping retain existing ones and encouraging international trade.
But Davenport said some of the agency’s services are redundant. For example, she said, the state spends more than $400,000 serving small businesses. But the federal Small Business Administration also does this kind of work, including one-on-one counseling with companies.
Davenport said another $400,000 is spent on economic information and research, gathering much of the same data as other public and private organizations.
And while there may be some role for marketing the state as a home for new companies, Davenport said a lot of the real work is done by other groups.
Yuhas acknowledged that organizations like the Greater Phoenix Economic Council do much of the heavy lifting in terms of economic development. But he said there is a need for a central agency for companies to contact and to coordinate.
"There’s a reason why every other state has an economic development agency,’’ he said.
Yuhas said Davenport’s staffers not only do not understand economic development but did not bother to contact many of the companies that rely on the agency.
"It was a process in which the conclusions were predetermined and then they went out and attempted to find the facts to back it up," he said.
But Davenport said her auditors, who are charged with reviewing all state agencies, go in with an open mind and attempt to learn all they can about each one.
Todd Bankofier, president of the Arizona Technology Council, said the need for the agency is critical.
He said Arizona ranks 39th nationwide in per capita income, a figure he attributes to the lack of high paying jobs high-tech and manufacturing jobs. Bankofier said only the Department of Commerce is focused on bringing those kind of employers to Arizona.
Yuhas said eliminating the agency makes no fiscal sense, saying its annual budget of about $7 million — about half of which comes from tax dollars — is more than repaid with the additional new business brought to the state. He put that figure at $400 million over three years.